Economic Diplomacy for ASEAN Unity

25 October 2018

ASEAN has not received high marks for unity, to say the least. This disunity was blatantly on display during the 2012 ASEAN Summit in Cambodia when the group failed to produce a joint communiqué and this year in Vientiane when the group nearly failed to do so. The issues at hand were engagement with China and the dispute in the South China Sea, not unrelated.

One cause of such disunity is the deep strategic and development relations between lesser developing ASEAN members and their regional partners. This allows for external meddling and deliberate wedge-driving from these partners in ASEAN, eroding the group’s autonomy.

Deep relations with regional partners and autonomy are not mutually exclusive. Yet, without deep relations among ASEAN members themselves, the latter can result in dependence, hence the erosion of strategic autonomy.

Other analysts have driven this point home. In a recent piece for The Jakarta Post, Evan Laksmana provided conceptual clarity of the relationship between ASEAN centrality, unity and autonomy. When unity is a prerequisite for centrality, autonomy is in turn a prerequisite for unity.

Can ASEAN retain this autonomy in a time of great power competition? Economic diplomacy can help and Indonesia should provide the leadership.

It is an underemployed statecraft. For this to work, it is imperative that Indonesia’s foreign policy establishment first puts its house in order on economic diplomacy. The current practice is too biased toward national development and ignores the country’s strategic interests.

The Economic Diplomacy Working Group at the Ministry of Foreign Affairs exemplifies this. Established under Minister Retno L. Marsudi, it has been the only body in the ministry focused on economic relations ever since the abolition of Directorate-General of External Economic Relations in 2008.

With no nomenclature, the ad-hoc body is tasked with four fields: trade, tourism, investment and development cooperation. With emphasis on the first three, the Working Group puts the agenda of national development in the front seat, while putting strategic interests in the back seat.

To be clear, institutionally advocating for national development in Indonesia’s foreign policy is a noble goal. But this needs to be balanced out with calculation of strategic interests, especially in the ministry that formulates and implements foreign policy. As laid out by Jan Aart Scholte in the Journal of Corporate Citizenship ( 2011 ), Indonesia’s current practice is supposed to be called commercial diplomacy. A true economic diplomacy mobilizes economic resources, as sanction or reward, to achieve foreign policy objectives.

How can Indonesia’s economic diplomacy help ASEAN unity, then? One of the causes of ASEAN disunity and the task left out by the Working Group both offer clues to the remedy. Indonesia needs to push for economic diplomacy through development cooperation, both in ASEAN and at the national level.

First, ASEAN should increase its engagement with its lesser developing members through development cooperation and community integration efforts. It is high time that ASEAN as a single transnational group becomes a development player, especially in its lesser developing members.

ASEAN has to be the major actor in development assistance in its lesser developing members if ASEAN is to have a shot at unity. In order to achieve this, members led by Indonesia and relatively more developed ones need to increase their institutional and funding commitments to the Secretariat.

Also, ASEAN needs to push forward with its integration efforts under ASEAN Economic Community. This is crucial to increase intra-economic relations and hopefully cement unity and solidarity. Such goals are lofty but there have been encouraging signs that it is no impossible feat. A glance at the data by the ASEAN Statistical Yearbook 2014 shows that ASEAN 6 founding countries are the biggest investors in Cambodia. This challenges the conventional wisdom that China is the most influential development partner there.

Second, Indonesia itself needs to enhance its presence in development cooperation, especially with lesser developing ASEAN members. The country’s main development cooperation program, South-South and Triangular Cooperation (SSTC), can be the instrument for this. In order to achieve this, further reforms of SSTC must proceed, as outlined in a study ( 2014 ) by Centre for Strategic and International Studies (CSIS) in Jakarta, SSTC National Coordination Team and the Japan International Cooperation Agency, Indonesia.

Highlighted reforms are in funding mechanism, regulatory framework, project streamlining, capacity building and monitory and evaluation. In light of these needed reforms, the strengthening of the National Coordination Team, mentioned in National Mid-Term Development Plan (RPJMN) 2015-2019, toward the establishment of a single agency for SSTC is the right step.

SSTC activities with ASEAN lesser developing members such as Cambodia, Laos and Myanmar should be the priority. This is especially to be implemented with relevant line ministries, state-owned enterprises and the private sector.

It is time for ASEAN to earn its unity. With economic diplomacy, ASEAN needs to put its money where its mouth is and Indonesia should lead the way.